A four-year investor engagement with 25 giant food retailers and manufacturers, led by the FAIRR investor network, has found that two in five global food giants with combined annual revenues of US$459 billion now have dedicated teams to develop and sell plant-based alternatives to meat and dairy; with Tesco and Unilever ranked top. Meanwhile, FAIRR’s engagement on sustainable proteins rockets to US$13 trillion in assets, growing ten-fold since its launch in 2016, including Northern Trust Asset Management, BMO Global Asset Management and Amundi.
Investors praised Tesco and Unilever for their commitment to shifting food portfolios to more sustainable protein sources, demonstrating board-level support for a climate-aligned protein transition and completing a climate “scenario analysis” on their commodity supply chains. In total seven of 15 retailers now sell, or plan to sell plant-based meat alternatives “on the meat aisle.”
Investors also welcomed a 57 percent increase from 2019 to 2020 in food companies with Scope 3 emissions targets, including emissions from animal agriculture. Despite agriculture accounting for around 30 percent of global greenhouse gas emissions and forestry and other land-use, corporate targets have historically failed to address the emissions footprints of animal agriculture and its supply chains.
Appetite for disruption
The data comes from the new online Sustainable Proteins Hub for investors, and “Appetite for Disruption: A Second Serving” report, launched by the FAIRR Investor Network. Since it began in 2016 (with 40 investors managing US$1.25 trillion of assets), FAIRR’s Sustainable Proteins Engagement has grown ten-fold to include 88 investors managing over US$13 trillion in assets in 2020. The coalition aims to encourage 25 global food retailers (15) and manufacturers (10) – including Nestlé, M&S, Sainsbury’s, Carrefour, Costco, Amazon and Walmart – to diversify their protein sources to drive growth and reduce risk in a post-COVID, resource-constrained world.
The announcement comes during a time where plant-based food trends are booming. Innova Market Insights pegs the “The Plant-Based Revolution” as the second most significant trend to influence NPD this year, fueled by growing consumer awareness of the impact of meat consumption on personal and planetary health.
Plant-based innovation in food and beverages continues to flourish due to consumer interest in health, sustainability and ethics, which ties into the broader consumer lifestyle trend towards cleaner living. As the use of the term “plant-based” moves more into the mainstream, the industry and start-ups, in particular, are taking up the challenge to deliver more clean label meat and dairy alternatives with improved nutritional profiles.
New launches with vegan claims have seen a substantial rise and are barreling toward the mainstream. Innova Market Insights notes a 23 percent annual growth of food and beverage launches tracked with vegan claims (Global, 2015 to 2019). Moreover, vegan food is becoming more significant, with more than one in four global consumers saying vegan alternative food launches are most sustainable (Innova Market Insights Survey Global, 2019).
A watershed year?
The report highlights new research that shows over US$1.1 billion of venture investment has flowed into alternative proteins in the first half of 2020, more than double last year’s total investment (US$534 million). In addition, the alternative protein market is expected to grow to US$17.9 billion by 2025. Amid public concern over the link between meat production and the ongoing COVID-19 and African swine fever crises, retailers and manufacturers face a surge in demand for plant-based products.
This has been felt most acutely in China, where pork consumption is estimated to drop by 35 percent this year, while plant-based pork brand OmniFoods saw record growth across China and other Asian markets. Brands like Impossible Foods and Oatly have set their sights on the region and Nestlé is to build a US$100 million plant-based center in China.
“The company data published is hard evidence that big food brands are vying for their slice of the plant-based pie. They are drastically scaling-up and skilling-up their capacity to research and develop plant-based alternatives to meat and dairy. Tangible goals for a protein transition are being put in place,” says Jeremy Coller, Founder of FAIRR and Chief Investment Officer at Coller Capital.
“The post-COVID landscape has made 2020 a watershed year for the sustainable protein market: the sector has attracted double the investment of last year in just six months. This engagement shows which food companies are putting in place the infrastructure and innovation to benefit from this seismic shift in the ways we shop and eat; and those that will lose out. Investors are watching closely.”
